The proceeds from the sale have been used to repay debt
Loss-making auto and auto engineering company Premier has concluded sale of its 26.5 acre land parcel at Pune to real estate firm Runwal Group for Rs 217.5 crore.
The sale marks another end to the company's link to the automobile industry. The Pune land parcel was where Premier used to manufacture the Rio: India's first SUV in the sub-four metre segment.
The entry into the SUV segment was an attempt by Premier to retain its foothold in the industry after shut production of its iconic Padmini in 2003.
Premier (formerly Premier Automobiles) had a tie-up with Italy's Fiat and France's Peugeot two decades ago to manufacture cars from its Kurla factory in Mumbai. The joint ventures were dissolved after repeated losses.
Rio was launched in 2009, but couldn't duplicate the success of Padmini. Due to poor response, the model was pulled out from the market.
The Pune land parcel also hosted the company's R&D centre and a unit that manufactured auto components.The land dealThe proceeds of the sale has been used to repay debt, the company informed the BSE. “We wish to inform that with the approval of secured lenders, the company has concluded the sale of its land at Chinchwad, Pune, measuring 1,07,336 square meters in favour of Virgo Retail Ventures (an associate of Runwal Group) for a total consideration of Rs 217.50 crore”, Premier said in the release.
Runwal had earlier agreed to develop Premier's 150 acre land parcel in Dombivli, Mumbai for which the automaker received Rs 220 crore.
Around 90 percent of Premier's secured bank loans have been assigned to Edelweiss Assets Reconstruction Co and the balance to Corporation Bank. In December last year, the bank moved a petition before the National Company Law Tribunal (NCLT), Mumbai for recovery of its dues.
“Of the above consideration received, the company repaid secured and other debt of about Rs 181 crore. Rs 36.50 crore has been utilised towards corporate purposes, including relocation of the plant from Chinchwad, Pune to Chakan Industrial Area about 20 km away,” the company added.
Earlier, Premier said it was in the final stages of shifting from Chinchwad and has started pilot operations at the new site in Chakan (also in Pune district). The new plant has been taken on a 10 year lease with an option to extend by a further 10 years. Full scale operations at the new plant are expected to commence shortlyThe management said it is in discussions with its secured lender for restructuring of the balance debt and stabilising operations at the new plant.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.